TSX:AX.PR.E - Post by User
Post by
Torontojayon Dec 23, 2024 7:49am
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Post# 36374704
Excess Cape yield on S&P 500
Excess Cape yield on S&P 500 The real earnings yield on the S&P 500 is 2.65%. This is simply the inverse of the Shiller P/E ratio. The excess Cape yield is the difference between real returns for the S&P vs the yield on a 10 year real treasury rate. The current 10 year Tips is yielding 2.23% which is what investors should expect to earn on a 10 year treasury note after you adjust for inflation. The difference between the real earnings yield on the S&P 500 and the 10 year Tips is 0.42%. In other words, investing in the stock market over the next 10 years will improve your "real" returns by only 0.42% which is historically well below average. Put another way, without taking on any risk over a 10 year horizon, you can achieve similar returns to the S&P 500 by simply buying a 10 year treasury note.
Is the stock market over valued? I don't know you tell me.
https://fred.stlouisfed.org/series/WLTIIT
https://www.multpl.com/shiller-pe